Bombardier Announces Financial Results for the Fourth Quarter and the Fiscal Year Ended December 31, 2013

February 13, 2014Montréal
Bombardier Inc.,
Press Release

(All amounts in this press release are in U.S. dollars unless otherwise indicated. This press release contains both IFRS and non-GAAP measures. Non-GAAP measures are defined and reconciled to the most comparable IFRS measures in the Corporation’s MD&A. See Caution regarding non-GAAP measures at the end of this press release. Comparative figures have been restated. See Note 1 to the Financial Highlights table.)

Revenues of $18.2 billion, compared to $16.4 billion last fiscal year

EBIT of $923 million, or 5.1% of revenues, compared to $666 million, or 4.1%, last fiscal year

EBIT before special items(1) of $893 million, or 4.9% of revenues, compared to $806 million, or 4.9%, last fiscal year

Net income of $572 million (diluted EPS of $0.31), compared to $470 million (diluted EPS of $0.25) last fiscal year

Adjusted net income(1) of $608 million (adjusted EPS(1) of $0.33), compared to $671 million (adjusted EPS of $0.36) last fiscal year

Net investment of $2.3 billion in property, plant and equipment (PP&E) and intangible assets, including $2.0 billion related to aerospace program tooling, compared to $2.1 billion last fiscal year, including $1.7 billion related to aerospace program tooling

Free cash flow usage(1) of $907 million, compared to a usage of $636 million last fiscal year

Available short-term capital resources of $4.8 billion including cash and cash equivalents of $3.4 billion as at December 31, 2013, compared to $4.0 billion and $2.6 billion respectively, as at December 31, 2012

Record backlog of $69.7 billion, compared to $64.9 billion as at December 31, 2012

(1)See Caution regarding non-GAAP measures at the end of this press release.

Bombardier today reported its financial results for the fourth quarter and fiscal year ended December 31, 2013. Revenues totalled $5.3 billion for the fourth quarter ended December 31, 2013, compared to $4.6 billion for the corresponding period last fiscal year. For the year, revenues totalled $18.2 billion, an increase of 11% compared to $16.4 billion last fiscal year.

For the fourth quarter ended December 31, 2013, earnings before financing expense, financing income and income taxes (EBIT) before special items totalled $186 million, or 3.5% of revenues, compared to $164 million, or 3.5%, for the corresponding period the previous year. For the year, EBIT before special items was $893 million, or 4.9% of revenues, compared to $806 million, or 4.9%, last fiscal year. For the fourth quarter ended December 31, 2013, EBIT was $185 million, or 3.5% of revenues, compared to $1 million for the corresponding period the previous year. For the year, EBIT amounted to $923 million or 5.1% of revenues, versus $666 million or 4.1% last fiscal year.

On an adjusted basis, net income amounted to $129 million, or adjusted earnings per share (EPS) of $0.07, for the fourth quarter ended December 31, 2013, compared to $181 million, or $0.10, for the corresponding period the previous year. Adjusted net income for fiscal year 2013 amounted to $608 million, compared to $671 million for the last fiscal year, resulting in an adjusted EPS of $0.33, compared to $0.36 last fiscal year. Net income amounted to $97 million, or diluted EPS of $0.05, for the fourth quarter ended December 31, 2013, compared to a net loss of $4 million, or a loss per share of $0.01, for the corresponding period the previous year. Net income for the year ended December 31, 2013 amounted to $572 million, compared to $470 million for the last fiscal year. Diluted EPS was $0.31, compared to diluted EPS of $0.25 last fiscal year.

For the three-month period ended December 31, 2013, free cash flow (cash flows from operating activities less net additions to property, plant and equipment and intangible assets) totalled $771 million, compared to $854 million for the corresponding period the previous year. Free cash flow usage totalled $907 million for the year ended December 31, 2013, compared to a free cash flow usage of $636 million last fiscal year. Available short-term capital resources of $4.8 billion included cash and cash equivalents of $3.4 billion as at December 31, 2013, compared to $4.0 billion and $2.6 billion respectively as at December 31, 2012. The overall backlog increased by close to $5 billion since the beginning of the year, reaching a record level of $69.7 billion as at December 31, 2013.

“2013 was a good year for Bombardier with major milestones reached in our product development: the CSeries had its first flight in September and is now well into its extensive flight test program. Both the Learjet 70 and 75 aircraft have entered into-service and in Transportation, the ZEFIRO 380 very high speed trainis progressing well towards homologation,” said Pierre Beaudoin, President and Chief Executive Officer, Bombardier Inc.

“Aerospace as well as Transportation had another year of strong orders bringing our backlog to a record $69.7 billion, offering great visibility on revenues for the next four years. And 2014 is off to an impressive start with more than $5 billion of new orders already obtained since the beginning of the year.”

“We’re both excited and realistic about the next two years. We’ve continued to invest during challenging times to improve our leadership position in the market place. We have one overriding objective and commitment: generating strong, sustainable, profitable growth. And our investments are about to pay off,” concluded Mr. Beaudoin.

Bombardier Aerospace

Bombardier Aerospace’s revenues amounted to $2.9 billion for the three-month period ended December 31, 2013, compared to $2.6 billion for the corresponding period last fiscal year. For the year, revenues totalled $9.4 billion, compared to $8.6 billion last fiscal year.

For the fourth quarter ended December 31, 2013, EBIT totalled $93 million, or 3.2% of revenues ($94 million, or 3.3%, before special items), compared to $84 million, or 3.2%, for the same quarter the previous year. EBIT before special items totalled $388 million or 4.1% of revenues for the year ended December 31, 2013, compared to $367 million, or 4.3% last fiscal year. For the year, EBIT was $418 million, or 4.5% of revenues, compared to $390 million, or 4.5%, last fiscal year.

Free cash flow totalled $87 million for the fourth quarter ended December 31, 2013, compared to $277 million for the corresponding period last fiscal year. For the year ended December 31, 2013, free cash flow usage totalled $1.2 billion compared to a usage of $867 million for the last fiscal year.

A total of 238 aircraft were delivered during the year ended December 31, 2013, compared to 233 for the last fiscal year, mostly in line with guidance.

Bombardier Aerospace had another strong year of order intake at 388 net orders for a book-to-bill ratio of 1.6. Bombardier Business Aircraft achieved a net order intake of 305 aircraft, including a firm order from the acquirer of the Flexjet activities for 85 aircraft of the Learjet family and 30 of the Challenger family, valued at $2.4 billion (based on list prices), with options for 150 additional aircraft, as well as an order from an undisclosed customer for 28 aircraft of the Global family and 10 Challenger 605 jets for a value of $2.2 billion (based on list prices).

Bombardier Commercial Aircraft received 81 firm orders during the year for a book-to-bill ratio of 1.5 for the year. Some of the largest orders received were from Ilyushin Finance Co. (IFC) of Russia, which placed a firm order for 32 CS300 aircraft valued at $2.6 billion (based on list price) with options for an additional 10 aircraft, and American Airlines Group Inc., from the U.S., which purchased 30 CRJ900NextGen aircraft valued at $1.4 billion (based on list price), with options for an additional 40 CRJ900NextGen aircraft.

Subsequent to year-end, the group also received an order from Al Qahtani Aviation Company from the Kingdom of Saudi Arabia for 16 CS300 aircraft, with options for an additional 10. Based on list price, the firm order is valued at $1.2 billion. As of now, Bombardier Aerospace has received 201 firm orders for the CSeries aircraft, with total commitments of 445 aircraft from 17 customers and operators in 14 countries.

Bombardier Aerospace’s backlog reached a record $37.3 billion as at December 31, 2013, compared to $32.9 billion as at December 31, 2012.

The aircraft development programs are progressing well. The CSeries’ aircraft program initial ground and flight test performance results are in line with our expectations. The CS100 aircraft’s entry-into-service is now scheduled for the second half of 2015 and the CS300 aircraft’s entry-into-service will follow approximately six months after. The Learjet 85 aircraft program is making solid progress and is preparing for its first flight in the coming weeks.

In 2014, Bombardier Aerospace expects to achieve an EBIT margin of approximately 5%. The cash flows from operating activities should reach between $1.2 billion and $1.6 billion in 2014, while the net additions to property, plant and equipment (PP&E) and intangible assets are expected to be between $1.6 billion and $1.9 billion. In 2015, the level of net additions to PP&E and intangible assets is expected to be between $1.2 billion and $1.5 billion and to be below $1.0 billion in 2016. Finally, during 2014, Bombardier Aerospace expects to deliver approximately 200 business and 80 commercial aircraft, representing a combined increase of close to 20% compared to last year’s deliveries.(2)

Bombardier Transportation

Bombardier Transportation’s revenues amounted to $2.5 billion for the three-month period ended December 31, 2013, compared to $2.0 billion for the same period last year. Revenues totalled $8.8 billion for the year ended December 31, 2013, compared to $7.8 billion for the last fiscal year.

For the fourth quarter ended December 31, 2013, EBIT totalled $92 million, or 3.8% of revenues, compared to $80 million before special items, or 3.9%, (a loss of $83 million after special items) for the same quarter the previous year. For the year, EBIT was $505 million, translating into an EBIT margin of 5.8% of revenues, compared to $439 million before special items, or 5.6%, ($276 million after special items, or 3.5%) last fiscal year.

Free cash flow totalled $767 million for the quarter ended December 31, 2013, compared to $675 million for the same period last fiscal year. Free cash flow amounted to $668 million for the year ended December 31, 2013, compared to $488 million for the last fiscal year.

New orders reached $8.8 billion for a book-to-bill ratio of 1.0, in the context of increased revenues, compared to $9.2 billion for last fiscal year. The order backlog totalled $32.4 billion as at December 31, 2013, compared to $32.0 billion as at December 31, 2012.

Bombardier Transportation signed significant contracts across all its product segments and geographic regions. The group concluded agreements to deliver 130 TRAXX electric locomotives and 18 electric double-deck multiple units (EMUs) to Deutsche Bahn, for a total value of $1 billion. The Stockholm Public Transport Authority of Sweden granted a contract for 384 MOVIA metro cars valued at $771 million, while S-Bahn Hamburg GMbH signed an agreement for 60 single and dual-voltage commuter trains valued at $427 million. Bombardier Transportation entered the growing tram market in China through its technology-licensing agreement with CSR Nanjing Puzhen Rolling Stock Co. Ltd. (CSR Puzhen). So far, CSR Puzhen has won orders for 18 low-floor trams and 15 catenary-free low-floor trams using Bombardier Transportation’s FLEXITY 2 technology.

Subsequent to year-end, as part of a consortium, Bombardier Transportation entered into a contract valued at approximately $4.1 billion with the State of Queensland, Australia, for the New Generation Rollingstock Project. The group’s share of the contract, consisting in the supply of 75 EMUs, the construction of a purpose-built maintenance centre and 30 years of maintenance services, is valued at $2.7 billion.

Also subsequent to year-end, Bombardier Transportation has been recommended as the winning bidder for the Crossrail rolling stock and depot contract in the United Kingdom.

Excluding currency impacts, revenues in 2014 are expected to be higher than in 2013, with a mid-single digit percentage growth. The group expects a book-to-bill ratio in excess of 1.0 for fiscal year 2014. Its free cash flow is expected to be generally in line with EBIT, although it may vary significantly from quarter to quarter. While an EBIT margin of 8% remains the objective, Bombardier Transportation expects an EBIT margin of approximately 6% in 2014, as it focuses on contract execution improvement.(2)

DIVIDENDS ON COMMON SHARES

Class A and Class B Shares
A quarterly dividend of $0.025 Cdn per share on Class A Shares (Multiple Voting) and of $0.0254 Cdn per share on Class B Shares (Subordinate Voting) is payable on March 31, 2014 to the shareholders of record at the close of business on March 14, 2014.

Holders of Class B Shares (Subordinate Voting) of record at the close of business on March 14, 2014 also have a right to a priority quarterly dividend of $0.000390625 Cdn per share.

DIVIDENDS ON PREFERRED SHARES

Series 2 Preferred Shares
A monthly dividend of $0.0625 Cdn per share on Series 2 Preferred Shares has been paid on November 15 and December 15, 2013 and January 15, 2014.

Series 3 Preferred Shares
A quarterly dividend of $0.195875 Cdn per share on Series 3 Preferred Shares is payable on April 30, 2014 to the shareholders of record at the close of business on April 11, 2014.

Series 4 Preferred Shares
A quarterly dividend of $0.390625 Cdn per share on Series 4 Preferred Shares is payable on April 30, 2014 to the shareholders of record at the close of business on April 11, 2014.

About Bombardier

Bombardier is the world’s only manufacturer of both planes and trains. Looking far ahead while delivering today, Bombardier is evolving mobility worldwide by answering the call for more efficient, sustainable and enjoyable transportation everywhere. Our vehicles, services and, most of all, our employees are what make us a global leader in transportation.

Bombardier is headquartered in Montréal, Canada. Our shares are traded on the Toronto Stock Exchange (BBD) and we are listed on the Dow Jones Sustainability World and North America indexes. In the fiscal year ended December 31, 2013, we posted revenues of $18.2 billion. News and information are available at bombardier.com or follow us on Twitter @Bombardier.

For Information

The Management’s Discussion and Analysis and the Consolidated Financial Statements are available at ir.bombardier.com.

FORWARD-LOOKING STATEMENTSThis press release includes forward-looking statements, which may involve, but are not limited to: statements with respect to our objectives, guidance, targets, goals, priorities, our market and strategies, financial position, beliefs, prospects, plans, expectations, anticipations, estimates and intentions; general economic and business outlook, prospects and trends of an industry; expected growth in demand for products and services; product development, including projected design, characteristics, capacity or performance; expected or scheduled entry-into-service of products and services, orders, deliveries, testing, lead times, certifications and project execution in general; our competitive position; and the expected impact of the legislative and regulatory environment and legal proceedings on our business and operations. Forward-looking statements generally can be identified by the use of forward-looking terminology such as “may”, “will”, “expect”, “intend”, “anticipate”, “plan”, “foresee”, “believe”, “continue”, “maintain” or “align”, the negative of these terms, variations of them or similar terminology. By their nature, forward-looking statements require us to make assumptions and are subject to important known and unknown risks and uncertainties, which may cause our actual results in future periods to differ materially from forecasted results. While we consider our assumptions to be reasonable and appropriate based on information currently available, there is a risk that they may not be accurate. For additional information with respect to the assumptions underlying the forward-looking statements made in this press release, refer to the respective Guidance and forward-looking statements sections in Overview Aerospace and Transportation sections in the Management’s Discussion and Analysis (“MD&A”) of the Corporation’s financial report for the fiscal year ended December 31, 2013.

Certain factors that could cause actual results to differ materially from those anticipated in the forward-looking statements include risks associated with general economic conditions, risks associated with our business environment (such as risks associated with the financial condition of the airline industry and major rail operators), operational risks (such as risks related to developing new products and services; doing business with partners; product performance warranty and casualty claim losses; regulatory and legal proceedings; the environment; dependence on certain customers and suppliers; human resources; fixed-price commitments and production and project execution), financing risks (such as risks related to liquidity and access to capital markets, exposure to credit risk, certain restrictive debt covenants, financing support provided for the benefit of certain customers and reliance on government support) and market risks (such as risks related to foreign currency fluctuations, changing interest rates, decreases in residual values and increases in commodity prices). For more details, see the Risks and uncertainties section in Other in the MD&A of the Corporation’s financial report for the fiscal year ended December 31, 2013. Readers are cautioned that the foregoing list of factors that may affect future growth, results and performance is not exhaustive and undue reliance should not be placed on forward-looking statements. The forward-looking statements set forth herein reflect our expectations as at the date of this press release and are subject to change after such date. Unless otherwise required by applicable securities laws, we expressly disclaim any intention, and assume no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. The forward-looking statements contained in this press release are expressly qualified by this cautionary statement.

CAUTION REGARDING NON-GAAP MEASURES This press release is based on reported earnings in accordance with International Financial Reporting Standards (IFRS). Reference to generally accepted accounting principles (GAAP) means IFRS, unless indicated otherwise. It is also based on non-GAAP financial measures including EBITDA, EBIT before special items, EBIT margin before special items, adjusted net income, adjusted earnings per share and free cash flow. These non-GAAP measures are directly derived from the Consolidated Financial Statements, but do not have a standardized meaning prescribed by IFRS; therefore, others using these terms may calculate them differently. Management believes that providing certain non-GAAP performance measures, in addition to IFRS measures, provides users of our Consolidated Financial Statements with enhanced understanding of our results and related trends and increases transparency and clarity into the core results of our business. Refer to the Non-GAAP financial measures section in the MD&A for definitions of these metrics. Refer to Non-GAAP financial measures and Liquidity and capital resources sections and Analysis of results sections in Aerospace and Transportation of the Corporation’s MD&A for reconciliations to the most comparable IFRS measures.